South Africa's government has indicated that it may sell its shareholding in South Africa’s largest fixed-line telephone group, Telkom. This is according to a statement the telecommunications company sent to shareholders.

The South African government holds a 39% equity stake in Telkom. Rumors are that the government is possibly using this potential sale as a means to raise funds to bail out the state owned airline, South African Airways (SAA).

"Shareholders are advised that Telkom’s major shareholder, the Government of the Republic of South Africa (“Government”), is currently considering various strategic options with regards to partially reducing its current approximate 39% shareholding in Telkom (“Government’s Telkom Proposal”)," said Telkom in the statement.

This comes after South Africa's Minister of Finance, Malusi Gigaba, in July 2017 revealed that the government possibly needs to sell some state assets for it to be able to pump an estimated $1,2 billion (R16 billion) into SAA so it can repay its loans.

"The implementation of Government’s Telkom Proposal may have a material effect on Telkom’s share price. Accordingly, shareholders are advised to exercise caution when dealing in Telkom’s securities until a further announcement is made in this regard," the company concluded in the statement.

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